France has submitted to Russia proposals regarding termination of the contract for the delivery of two Mistral helicopter carriers. The proposal assumes paying Russia €785 million after its government signs a permission for selling the ships to any third-party without any restrictions, Kommersant reports.
Moscow disagreed with this approach and assessed expenses and losses caused by termination of the contract at €1.163 billion. Moreover, Russia is not going to sign any permission for selling the vessels until the sum is returned.
Sources familiar with the situation said that Paris prepared documents for termination of intergovernmental agreement for construction of Mistral helicopter carriers and delivery of 2 vessels of the type to Russia and submitted them to Moscow. We remind you that the first document was signed on January 25th 2011 by Vice premier Igor Sechin and French Minister of Defense Alain Juppe, while the agreement for construction of two Mistrals was signed on June 17th 2011 by Rosoboronexport and DCNS.
“The government, the Russian Defense Ministry and every department and organization involved in the Mistral project are studying the draft documents,” a source told Kommersant.
Over the last year the fate of two Mistral helicopter carriers “Vladivostok” and “Sevastopol” was one of the major problems in relations between Russia and France. The first vessel should have been delivered to Russian party in November 2014. However, French authorities have postponed the delivery several times in light of situation in Ukraine, but they have never talked about termination of contract before.
At that DCNS had to maintain the Vladivostok ship at its own expense – French experts assess the company’s expenses at €5 million per month. French Minister of Defense Jaen-Yves Le Drian hinted that Russia might not take delivery of Mistrals, but the President of Russia Vladimir Putin said that in this case Moscow expects France to return advance payment transferred to France for construction of the vessels. Otherwise Russia will have a legal basis for filing a case in European Court of Arbitration.
The French party did not want to go this far and tried to resolve the issue in diplomatic ways. According to sources familiar with the proposals, a size of the refund was the key issue of the negotiations. France declared its readiness to pay €784.6 million in compensation for Russia's "expenses and losses", but the Russian Defense Ministry disagreed and assessed "expenses and losses" incurred by "Russian organizations" in the construction and maintenance of helicopter carriers at €1.163 billion.
Sources told that France was hoping to pay back the sums stated in work acceptance certificates and Russia intended to demand both the advance payment of €892.9 million and the funds spent on personnel training (400 sailors), construction of helicopter carrier infrastructures in Vladivostok and development of Kamov Ka-52K carrier-based helicopters (4 prototypes).
"We are absolutely not satisfied with the return of the sum mentioned by the French offer, and Vice Premier Dmitry Rogozin told Louis Gautier, Secretary General of the French General Secretariat for Defense and National Security, about it (Gautier is entitled to carry out the negotiations). They are preparing their arguments".